Lending Scams: Tips to Avoid Illegal Digital Lenders

Cases of digital fraud are on the rise, often involving the same culprit: loan applications. Over the past couple of years, countless people across India have experienced varying degrees of harassment from these apps.

There are several loan apps currently operating in India, which provide small loans to borrowers through mobile apps. However, many of these apps are unregistered and unauthorized entities operating illegally. The typical modus operandi of these apps is to extend credit to needy customers who debt collectors then harass via calls. When downloaded, these lending apps often ask for permission to access personal and financial data stored on the customer’s mobile phone, which is then misused to harass them.

Murari Sridharan, CTO, BankBazaar.com, says, “Financial cyber fraud continues to rise, with new scams being frequently reported. By exercising caution and following recommended security practices when transacting online, borrowers can effectively reduce their risk of falling victim to financial fraud.

Considering the increase in cases of financial fraud, it is strongly advised to exercise caution when borrowing through loan apps. Here are some ways to be careful when borrowing digitally:

Choose an RBI Registered Lender

An important part of the borrowing process is knowing your lender. When exploring your options, choose a bank or non-bank financial company (NBFC) registered with the RBI. The RBI website lists the names of banks and NBFCs registered with it. This will help you determine if the lender you have chosen is regulated by law, reducing the risk of you going to an unauthorized lender. Almost all financial institutions registered with the RBI have official websites or mobile apps offering a range of lending services. It is advisable to use the app or website of an RBI registered lender to meet your borrowing needs.

Do not receive links, unsolicited messages

With increasing credit needs, unauthorized loan applications have proliferated over time, often offering quick credit with or without documentation. Chances are, you yourself have received unsolicited links or messages from these apps. The key to being safe here is to ignore and delete these communications, no matter how lucrative. By interacting with these links, you risk compromising your sensitive data, which may be subject to abuse.

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Beware of pushy lenders

Borrowing credit is a financial liability and should be done with caution. When applying for a loan, beware of callers asking for your bank details, such as card expiration details, PIN, OTP or bank passwords. Also avoid lenders who might chase you with a loan offer. It should be remembered that banks and financial institutions do not contact customers to obtain sensitive financial information. If you face such an instance with one lender, it is advisable to seek another lender.

Use strong passwords

Using strong passwords for your bank and online accounts is an effective way to protect yourself from these risks. Follow best practices for creating strong passwords and change them regularly. Use updated antivirus software on your mobile and PC.

Adhil Shetty, Managing Director of Bank Bazaar.com, suggests, “There are things you can do to make sure you don’t fall prey to unauthorized apps. First of all, avoid downloading unauthorized apps and only use apps that are registered and recognized for banking transactions. Second, avoid accessing or clicking on unknown links sent to you through SMS or any other messaging platform. Third, create strong passwords for your mobile device and social media accounts. If you receive a suspicious link or message, report it to the cybercrime department.

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Loan trap

* Use an RBI-registered lender’s app or website to meet your borrowing needs

* Create strong passwords for your PC, mobile device and social media accounts

* Avoid lenders chasing you with lucrative loan offers. Do not click on unsolicited loan application messages or links

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